Best Swing Trading Strategies that Work

Traders have different styles, and swing trading is a medium-term trading style. As such, traders that use swing trading strategies do not scalp. Swing trading strategies that work deal with a position for days. And, the best swing trading strategy keeps trades open, even for weeks.

Like any trading method, swing trading deals with speculation. Mastering the art of speculation is not something to take for granted.

Based on the time horizon they have in mind when trading, traders are:

Buy and sell a currency pair multiple times in a day. They aim for small/very small profits, with multiple entries.

Day traders. These traders close positions at the end of the trading day.

Swing traders. Swing trading strategies keep positions open for two to six trading days. Sometimes, even for weeks.

Typically, these are long-term oriented traders. Most of the time, financial entities invest. Not retail traders.

As a market participant, a trader must fit one of the categories above. In fact, it is not about the trading style. But more about a trader’s personality.

You see, not everyone trades the same. Human beings have different personalities.

Therefore, swing trading strategies that work may not fit an impatient trader. Even if their result is proven.

In the end, either trading constraints or human nature’s constraints define the trading style. A swing trader’s definition should start with the time/time frames considered.

Inflation is on every central bank’s mandate. When it differs from the forecast, central banks act.

Traders know that. On top of it, they have a time span to use.

Because inflation is released before a central bank’s meeting, swing trading appears. Or, the opportunity of a swing trade.

If inflation differs from the forecast, traders bet the central bank will change interest rates. But, typically, the inflation data comes out a couple of weeks earlier.

As such, the best swing trading strategies from a fundamental point, use inflation data. The central bank will hike rates on higher inflation. And, will cut them if it disappoints.

In both cases, the currency moves. This was just an example.

It aimed to show swing trading strategies that work using fundamental analysis. Many traders use them.

But plenty of other economic data is used the same way. All you need is to pay attention to details.

Trading with a Swing Trading Software

Anything that moves can be programmed. As such, traders can build an algorithm.

The most popular trading platform, the MetaTrader, allows for Expert Advisors building. Traders can program their own swing trading strategies.

In fact, today’s trading is mostly automated. Almost all trades are the result of a computer program.

Expect this trend to continue. With technology changing so fast, trading will change too.

It has changed and will continue to change. Traders have adapted as a consequence.

Expert advisors are easy to create, install and use. Over eighty percent of today’s trades come from an automated source.

If you come to think of it, every trader uses automated trading. When you place a pending order…that’s automated trading.

Or, when you set the take profit for your swing trading. Or the stop loss.

The system (trading platform) will close your trade automatically.

Coming back to swing trading strategies that work, they can be automated. All examples used here can.

But the idea is to understand how to use them first. It comes secondary to how trading takes place.

Moreover, the best swing trading strategy is one that wins most of the times. But, it doesn’t mean it must win all the time.

Therefore, trades have a stop loss in the first place.

Conclusion

Just like any speculative process, swing trading is risky business. But this is not news to Forex trading.

This is one of the riskier ways to make money. However, it is extremely rewarding.

This is what attracts people to it. And this is what trading strategies try to achieve.

Swing trading strategies work best when they’re part of a money management system. Successful trading must have rules.

A rule-based trading approach leads to correct market interpretation. No matter the approach, traders stand better chances when following rules.

In swing trading, the first condition is to trade four-hour and daily time frames. As such, you’re forced to consider a medium-term horizon for your trades.

The best swing trading strategy can only come from these two time frames. Anything above, it’s investing. And, anything below, it’s scalping.

That’s a different approach to trading. Or, different trading styles.

All in all, swing trading strategies that work appeal to traders who have patience. Traders who know what they’re after.

Moreover, these traders have more freedom. They’re not “trapped” in front of the screens.

When a trade appears and a setup is in place, you must give it time. That’s what swing trading is: trades that take a bit more time than day trading. But, not as much as buy and hold strategies. Or, investing.

Because it deals with “in-between” time frames like the daily and the four-hour ones, swing trading is not for everyone. However, the ones that master it will never try anything else.

Or, if they do, they’ll always have a special place for swing trading strategies that work. After all, if a profit is made, who cares about the strategy it came from?

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Damyan is a fresh MSc International Management from the International University of Monaco. During his bachelor and master programs, Damyan has been working in the area of financial markets as a Market Analyst and Forex Writer. He is the author of thousands of educational and analytical articles for traders. When being in bachelor school, he represented his university in the National Forex Trading Competition for students in Bulgaria and got the first place among 500 other traders. He was awarded a cup and a certificate at an official ceremony in his university.

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